Case no, 26 “Rocky Mountain Chocolate Factory

Frank Crail is a family-oriented person due to big population in the town. He dreams to find a
place that is peaceful that is away from the destructions, pollution and complicated town. At their
search they find Durango Colorado a perfect place to start. To raise his family, he checks location if
what would possible business the small-town needs. And they found out that it would be a car wash
or a chocolate shop. Founded in 1981 an incorporated in 1982 by Frank Crail and his two partners,
they successfully started the business and hit the taste of the customers. The business reflects the
character of Frank Crail they treat their customers as part of the family and mindful to their feelings
and give way to give comfort and assurance that their chocolate is made from a quality taste yet from
unforgettable taste. The customers are given the chance to witness how the chocolates is made.
Frank believed that the quality of the product is the way for the success the business come up with a
great procedure to be followed by a successful company.
The theme of the RMCF is traditional methods but recently redesigned store concept a more
contemporary presentation feature in-store cooking. A strategy that gaining the assurance of the
customers in reinforcing the quality and freshness of the products. The company established RMFC
stores in five primary environments; regional centers, tourist areas, outlet centers, street fronts,
airports and other entertainment shopping centers. The company previously decided on having six
directions with Crail and Merryman being the only two internal board members. RMFC founded in
1981 and has successfully started, Incorporated in 1982 where Frank left by the partners and the first
franchised stores open. In 1986 RMCF goes public on the NASDAQ. IN 1997 RMCF restructures to
focus on franchising. In 2001 the company logo, packaging, and new store interiors are updated. In
2002 the kiosk concept is interiors are updated. In 2002 the kiosk concept is developed. In 2005 the
company pays off all outstanding debt. In 2007 the United States was the strongest market for the
chocolate. According to a 2004 survey the U.S. chocolate market was far from being saturated, and
considerable opportunities for growth remained, particularly in the gourmet, higher- priced premium
segment. The company’s franchise concept had consistently been rated as outstanding franchise
opportunity and in January 2008, RMFC was rated the number one franchise opportunity in the Canay
category by Entrepreneur magazine.
The company had not attempted to often patent protection for the proprietary recipes develop
by the company’s Master Candy Maker and was relying upon its ability to maintain confidentially of
those recipes. The RMCF products has become well-known to the customers specifically in the
airports and the sports areas it is evident by the data given. Tourist areas 40 franchises (down from
45 in 2007). Regional Centers 95 (down from 100in 2007). Airports and Sports areas 12(up from 9 in
2007).
The stores themselves became tourist attractions in their own right, with much of the
confection- making process on display. Trademarks included hand-dipped caramel apples and fresh
fudge, heated in copper kettles and cooled on the 500; pound marble slab. The selection was
staggering, with some stores offering 30 kinds of apples, ranging from basic caramel to a gourmet
white chocolate and Oreo masterpiece.
RMCF revenues and profitability were subject to seasonal fluctuation in sales because of the
location of its franchises, which had traditionally been located in resort or tourist locations. As the
company had expanded its geographical diversity to include regional centers, it had seen some
moderation to its seasonal sales mix. Historically, the strongest sales of the company’s products had
occurred during the Christmas holiday and summer vacation seasons. Additionally, quarterly results
had been, and in the future are likely to be, affected by the timing of new stores openings and sales of
franchises.
 RMCF shops were blend of traditional and contemporary styles. The company sought to
establish a fun and inviting atmosphere in all of its location. Unlike most other confectionary stores,
each RMCF shop prepared certain product, including fudge from start.
RMCF focused primarily on local in-store marketing and promotional efforts by providing
customizable marketing materials, including advertisement, coupons, flyers, and mail-order catalogs
generated by its in-house Creative Services Department, and point-of-purchase materials. This
strategy is not in line to this new generation, the firm must focus in advertising the products where the
netizens can easily communicate. The internet is the best vehicle for communication, you may create
a website that will catch the attention of the customers wherein the high risk of not reading or giving
the attention to the flyers, coupons, mail-order catalogs and the like is avoided. The website must be
catchy and easy to understand and states the good quality if the product that can be lure to the
customers. They can also make an advertisement that can be attractive to the potential customers.
Such as using well-known child artist to reenact the advertisement. They can also formulate stickers
that can be posted in the different kind of transportation like motorcycle, bus, taxi and the like. They
can also get a blogger that will advertise their product but the firms should train the blogger to not
exaggerate the advertisement.

The main purpose of the RMCF is to produce product with a good quality. and we cannot deny
the fact that competitors arise. To secure the main taste and quality of the product they may used
their initiative to be ready for a possible problem with a good strategy. Long-term contracts are
agreement needs to imply in the contract a specified period of time between two firms the supplier or
raw materials to be the first priority. An exclusive firm that only have this king of agreement and
cannot have the same relationship with potential competitor. In the side of the supplier, they are not
dependent nor being controlled by the firm but only tied with the contract in a specified time of
agreement. If necessary, the firm can use the vertical growth wherein the grows by making its own
supplies and/or by distributing its own product. This may do in order to reduce costs, gain control over
a scarce resource, guarantee quality of a key input or obtain access to potential customers. Vertical
integration the degree to which a firm operates vertically in multiple locations on an industry value
chain from extracting raw materials to manufacturing to retailing.
Profit strategy to do nothing new because you can foresee that it was only a company’s
temporary problem. The potential customers were only been attracted with the new benefits they gain
to the other firm’s product. But trends are changing it has a big chance that they will came back to the
chocolates that is very evident to have a good taste by winning the blind taste competition. Rather
than announcing the company’s poor position to the shareholders. The top management needs to
make moves by blaming the decreasing number of franchise and/or by cutting excessive expensive.
In this way, you will not be giving efforts to persuade the other members to reduce company activities
and in effect you can maintain the cash flow of the firm in this kind of tactics.
The sale of chocolate and confectionary products was affected by changes in consumers
tastes and eating habits, including views regarding the consumption of chocolates, in addition,
consumer confidence recessionary and inflationary trends, equity market levels, consumer credit
availability interest taste, consumer disposable income and spending levels, energy prices, job
growth, and employment rates could impact the volume of customers traffic and level of chocolates
and confectionary sales. The company believed that the negative trend in the fiscal 2008 was due to
the overall weakening of the company and retail environment.
 According to the information the firm needs to secure the company’s ingredients by having
patent to assure the confidentiality of the secret ingredients. the best solution is to use concentric
diversification into a related industry may be very appropriate corporate strategy when a firm has a
strong competitive position but industry attractiveness is low. The selection of the best alternative
strategy is not the end of identifying the problems and formulating strategy.
Following from the selected strategy, implementations must form a guideline in formulating
decision making and actions in behalf of the organization. “Never bring the problem-solving stage into
the decision-making stage. Otherwise, you surrender yourself to the problem rather than the solution”-
anonymous. According to developing policies an effective policy accomplishes three things: it forces
trade-offs between competing resource demands. It tests the strategic soundness of a particular
action. It sets clear boundaries within which employees must operate while granting them freedom to
experiment within those constraints.
The company will set date to make research for a product that is related to the business for
approximately six years of Research and development in implementing new products. This plan
should be the weapon of the company to the competitors and should from consolidated ideas of the
members of the company about the things that can benefit in the company’s goodness. They should
use also a bases such starting to consolidating the views of the potential customers about the things
that need to enhanced by the Rocky Mountain Chocolate Factory.
The company must maintain the quality of the products and position in the industry. They
should not be comfortable din their chairs. They should not assume gains in the present. Their
mindset must be in the right track for success that can help to improve their company that will reflect
to the company of being competitive in the industry in meeting the needs of the customers. And when
the time comes the new product can easily adapt in the competitive world. This can be used as an
alternative medicine for the competition in the market and through the use of the new product the
company will gain new customers and help to increase the sales and number of the franchisee that is
ready to advertise the RMCF.
The company should gather potential investors that can help to fund future expenses of the
company in formulating new strategies to be go in the flow of the trends of the industry. Through
catering new products that can be beneficial to the customers especially to the conscious minded.
The company has a good foundation for expansion of the business that can be assume to effectively
gain success in the plan.
The only way to easily advertise the product is to be open in the suggestion in expanding
business in another country through gaining new franchiser of the RMCF such as in the tourist areas,
Regional Centers, airports and sports areas, kiosk and the like.
Being committed to a solution of focused on the identified alternative strategy the concentric
diversification to easily cope up the current problem. But in every decision has a consequence the
firm should accept the responsibility for the decision to be made. They should not only rely on one
process. They should explore the best possible means of implementing the solution. In resolving to
carry out the chosen solution.